Living in the false economy

I spent some time with Gareth this week pondering on what makes a good business in the recession. Unfortunately and not unexpectedly we did not achieve any startling clarity from our musings.

Gareth (having done lots of research) has confirmed that many businesses are simply ‘on hold’, they know that there is lots of stuff to be done, but right now no one is willing to commit to any sort of investment ‘just in case‘.

In case of what? In case we never come out of recession? – well even the most pessimistic of economists will agree that whether we are going through a ‘U’, ‘L’ or ‘W’ recession, at some point in the future there will be an upturn (which could be small, medium or large).

It is clear that most businesses will want to build revenue /profitability as it regrows on their current cost base, i.e. not employing more headcount before it becomes absolutely necessary. However in order to do this, efficiency, preparedness and scalability need to be invested in. On top of these foundations for growth, new rules and regulations are going to make compliance, governance and business continuity much more important that they have ever been to-date.

So ‘doing nothing’ is not really an option for businesses with a medium to long term view of the world. Doing nothing is a false economy which will lead short term-ist businesses to lose share, lose competitively or lose out altogether due to some man made or natural disaster (swine flu?) that could have been prepared for.

Only time will tell who were the wise and who were the fools – I know I would rather do business with the wise.